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There are a couple of issues battling it out on the stock market right now. They are quantitative easing and the decision to tax AIG bonuses — and other executive bonuses — at a rather high rate.

Quantitative easing and the stock market

The idea of quantitative easing from the Fed is one that Wall Street was fairly satisfied about. After all, the Fed announced that it would be buying $1.25 trillion worth of debt. First of all, the Fed said that it would step up its program to buy mortgage-backed securities. The Fed also said that it would buy more agency debt. These moves were welcomed, since it means that banks and other financial institutions will see some of their balance sheets cleaned up a bit.

The final thing that the Fed announced was that it will begin buying long-term U.S. Treasuries. While the $300 billion program is less than half of what will be spent on mortgage-backed securities, it is nonetheless meant to help the economy. Indeed, if this purchase can help get the economy moving again, investors will be happy.

AIG stalls the rally

Even though Wall Street is happy about quantitative easing, it is not so happy about the idea of taxing AIG bonuses — and other bonuses — exorbitantly. Indeed, even as the House passed a bill to tax such bonuses 90% for those making more than $250,000, the stock market turned around. The idea of such a large tax on million dollar bonuses is not palatable to the stock market. Of course, there is a point there, and Congress is probably over-reacting in this case.

As it is, though, the stock market isn’t down by much, and there is hope that it will recover.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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Even as the House of Representatives passes the economic stimulus bill negotiated between the two Houses of Congress, the stock market is slipping. As might have been foreseen, despite all the things that the Democrats did to try and placate Republicans, not a single one of them voted for the measure. The measure was always going to pass, since Democrats have enough to ram it through, and just enough Republicans in the Senate are likely to help is pass there.

In any case, after enjoying some gains today, the stock market is slipping into negative terrority as the last hour of trading begins. Yesterday’s late rally, on the news that mortgage subsidies may be used to help prevent foreclosures, has dissipated. Only the Nasdaq is managing to hold onto to its gains — but barely.

The economic stimulus bill itself is widely thought to be inadequate in addressing the concerns of the economy. However, other economic stimulus measures have largely carried stocks through the day:

• The aforementioned mortgage subsidies, which could help borrowers in trouble before they start missing payments. (Also along with this, a number of mortgage lenders have agreed to halt foreclosures.)
• Talk of more capital infusions for U.S. banks is creating some optimism in the financial sector. There is hope that the government will continue to buoy banks up. And, if the other economic stimulus measures work, the banks may not “need” as much money.
• The G7 Meeting underway in Rome may actually help the economy –if world leaders can agree on a course of action.

In any case, with all of these measures, it’s hard to imagine that economic stimulus won’t happen. Which means the time to buy stocks is now — while they are a great bargain.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

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There has been some speculation lately about what kinds of stocks would benefit under either a Barack Obama administration or a John McCain administration. Now that question is getting closer to being answered. However, it is also important to look at other effects that a Barack Obama presidency might have on your investments. And by that, I mean taxes.

CNN Money has great coverage of the main points of the Barack Obama economic policy. While we’ll still have to wait to see what actually happens and what is sacrificed to political expediency or to reality, it is probably a fairly safe bet that proposed taxes on investments will go through. The country needs the revenue.

Taxes on investments

There are two main taxes on investments that will likely be seen in a Barack Obama presidency:

1. Tax on carried interest. Right now, tax on carried interest is seen as an investment for tax purposes. This could change under Obama. Instead, this carried interest would be taxed as income, automatically subjecting it to a higher tax than the 15% rate that exists on investments.
2. Raise the capital gains and dividend tax rates. While #1 is unlikely to affect much beyond hedge funds and private equity, capital gains and dividends may affect retirement savings. However, the rate is to be raised to 20% from the current 15%, and only on couples making more than $250,000 and singles making more than $200,000. So if you make less, little is likely to change in terms of your retirement account.

Your retirement investments

Of course, your retirement account is made up of investments. Obama wants to provide a match on retirement savings for families that earn less than $75,000 a year. It’s a nice thought, but this is probably something that falls by the wayside, since funding it will be tough.

As always, though, it is up to you to do what you can to make the most of any situation. No matter who is president, you bear ulitmate responsibility for your decisions — and the success they bring you.